Mr. Chris Fowler reports

CWB REPORTS STRONG THIRD QUARTER FINANCIAL PERFORMANCE AND COMMON SHARE DIVIDEND INCREASE

Canadian Western Bank has released its financial results for the third quarter of 2018.

"CWB has delivered excellent performance through the first three quarters of fiscal 2018, and we are well positioned for a strong finish this year," said Chris Fowler, president and chief executive officer. "We surpassed a pair of key financial milestones for the first time this quarter, achieving $25-billion of total loans and more than $200-million of quarterly total revenues. With 12-per-cent loan growth from last year and 10-per-cent growth from Oct. 31, 2017, we are confident fiscal 2018 will be another year of double-digit expansion. Strong performance is apparent across our geographic footprint, with significant contributions from our growing presence in the Ontario market and expanded capabilities within targeted industries. I'm also pleased to report that our growth this quarter was once again complemented by higher net interest margin and strong credit quality, and we announced another dividend increase for common shareholders.

"Ongoing prudent and profitable diversification of both loans and funding sources directly reflects continued execution of our balanced growth strategy. To deliver further progress against our strategic goals, we continue to invest in technology and business process improvements to enable our people to do more for our clients. This quarter we surpassed key milestones in our programs to transition to the Advanced approach for credit risk and capital management, to deliver more efficient credit support processes and to transform our treasury infrastructure. Along with the successful launch of our new human resources information system subsequent to quarter-end, these achievements reflect outstanding contributions from CWB teams across the organization and represent tremendous progress against our strategy."

Third quarter 2018 highlights (compared with the same period in the prior year)

• Strong financial performance with record common shareholders' net income of $62-million, up 11 per cent, pretax, preprovision income of $111-million, up 10 per cent, and record total revenue of $205-million, up 12 per cent;
• Diluted and adjusted cash earnings per common share of 70 cents and 75 cents, both up 9 per cent. The business lending assets acquired on Jan. 31, 2018, contributed approximately four cents of adjusted cash earnings per common share in the third quarter and seven cents since closing;
• Continued execution of Canadian Western's balanced growth strategy with 12-per-cent loan growth. Loan growth included expansion in every province, with the strategically targeted general commercial and equipment financing and leasing categories accounting for 74 per cent of the increase from last year;
• Net interest margin of 2.64 per cent, up five basis points from last year and three basis points from last quarter;
• Continuing strong credit quality, with the provision for credit losses as a percentage of average loans at 21 basis points, compared with 20 basis points in the same quarter last year;
• Gross impaired loans represented 0.53 per cent of total loans, down from 0.74 per cent last year;
• Very strong Basel III regulatory capital ratios under the standardized approach for calculating risk-weighted assets, including 9.3 per cent common equity Tier 1 (CET1);
• Operating leverage was positive 2.5 per cent on a year-to-date basis and negative 1.4 per cent in the third quarter;
• Common share dividend declared on Aug. 29 of 26 cents per share, up two cents, or 8 per cent, from the dividend declared one year ago and one cent, or 4 per cent, from the dividend declared last quarter.

Canadian Western had strong third quarter financial performance with record common shareholders' net income of $62-million and pretax, preprovision income of $111-million, up 11 per cent and 10 per cent, respectively, from the third quarter last year. Diluted and adjusted cash earnings per common share of 70 cents and 75 cents were both up 9 per cent. Record total revenue of $205-million was up 12 per cent from last year, including a strong 14-per-cent increase in net interest income. Higher net interest income reflects the combined benefits of strong 12-per-cent loan growth and a five-basis-point increase in net interest margin to 2.64 per cent. Business lending assets acquired on Jan. 31, 2018, contributed 3 per cent to loan growth and four cents to adjusted cash earnings per common share. Non-interest income was down 8 per cent from last year mainly reflecting lower trust fees, following the strategic transactions within Canadian Western Trust Company (CWT) to appoint successor trustees for certain accounts, and lower credit-related fees. Credit quality remained strong, with the provision for credit losses representing 21 basis points of average loans, compared with 20 basis points in the same period last year. These factors were partly offset within common shareholders' net income by increases in non-interest expenses, the provision for credit losses and acquisition-related fair value changes.

Sequentially, common shareholders' net income and pretax, preprovision income were both 3 per cent higher. Diluted and adjusted cash earnings per common share were also both up 3 per cent. Net interest income was up 5 per cent from the combined benefits of three additional interest-earning days, 3-per-cent loan growth and a three-basis-point increase in net interest margin. Non-interest income was relatively unchanged. The provision for credit losses was 21 basis points as a percentage of average loans, compared with 20 basis points last quarter. Non-interest expenses were 5 per cent higher sequentially and acquisition-related fair value changes were down 2 per cent.

Year-to-date common shareholders' net income of $185-million and pretax, preprovision income of $325-million were up 20 per cent and 14 per cent, respectively. Diluted and adjusted cash earnings per common share of $2.07 and $2.23 were up 19 per cent and 18 per cent, respectively. Very strong earnings growth mainly reflects a 12-per-cent increase in total revenue and a lower provision for credit losses. Within total revenue, year-to-date net interest income was 14 per cent higher, driven by 10-per-cent loan growth and a six-basis-point increase in net interest margin to 2.59 per cent, while non-interest income was relatively unchanged. The year-to-date provision for credit losses of 20 basis points as a percentage of average loans was down from 24 basis points last year. Non-interest expenses were up 9 per cent on a year-to-date basis. Acquisition-related fair value changes were 11 per cent higher, reflecting continued strong performance within CWB Maxium.

About Canadian Western Bank

Canadian Western is a diversified financial services organization serving businesses and individuals across Canada. Operating from its headquarters in Edmonton, Alta., Canadian Western's key business lines include full service business and personal banking offered through 43 branches of Canadian Western Bank, including the CWB Virtual Branch, and Internet banking services provided by Motive Financial.

Fiscal 2018 third quarter results conference call

Canadian Western's third quarter results conference call is scheduled for Thursday, Aug. 30, 2018, at 2:30 p.m. ET (12:30 p.m. MT). Canadian Western's executives will comment on financial results and respond to questions from analysts. The conference call may be accessed on a listen-only basis by dialling 703-736-7380 (Toronto) or 844-400-1695 (toll-free) and entering passcode: 5958859. The call will also be webcast live on CWB's website. A replay of the conference call will be available until Sept. 6, 2018, by dialling 404-537-3406 (Toronto) or 855-859-2056 (toll-free) and entering passcode 5958859.

                                     SELECTED FINANCIAL HIGHLIGHTS
                                   (in thousands, except per share)    
 
                                                    Three months ended             Nine months ended    
                                                July 31        July 31        July 31        July 31
                                                   2018           2017           2018           2017
Results from operations
Net interest income                            $186,644       $163,991       $535,897       $471,896
Non-interest income                              18,345         19,852         58,895         59,617
Total revenue                                   204,989        183,843        594,792        531,513
Pretax, preprovision income                     110,695        100,360        325,006        284,827
Common shareholders' net income                  62,362         56,308        184,755        153,444
Earnings per common share
Basic                                              0.70           0.64           2.08           1.74
Diluted                                            0.70           0.64           2.07           1.74
Adjusted cash                                      0.75           0.69           2.23           1.89
Return on common shareholders' equity             10.8%          10.4%          11.0%           9.7%
Adjusted return on common shareholders'
equity                                             11.7           11.3           11.9           10.6
Return on assets                                   0.88           0.89           0.89           0.82
Efficiency ratio                                   46.0           45.4           45.4           46.4
Net interest margin                                2.64           2.59           2.59           2.53
Operating leverage                                 (1.4)           0.4            2.5            0.3
Provision for credit losses as a
percentage of average loans                        0.21           0.20           0.20           0.24
Number of full-time equivalent staff              2,173          2,034          2,173          2,034
Per common share
Cash dividends                                    $0.25          $0.23          $0.74          $0.69
Book value                                        25.87          24.31          25.87          24.31
Closing market value                              36.49          28.00          36.49          28.00

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